Streetsmart insurance Blog

In Part I of Subcontractors & Insurance Audits, we discussed the various ways that subcontractors can have a negative impact on your workers compensation insurance audit. Today, we will explain how uninsured/underinsured subcontractors can have a negative impact on your general liability insurance audit and provide you with advice that can help you mitigate the risk that they pose to your business.

Can Subcontractors Have A Negative Impact On My General Liability Insurance Audit?

Your insurance provider can adjust your premium at any point during your policy term if they find out that you have hired an uninsured/underinsured subcontractor, but they will typically review your policy and make adjustments for any employees or subcontractors that have not previously been accounted for during your general liability insurance audit. Your insurance auditor will request payroll and sales records to account for all of the employees and/or subcontractors that you have hired, including any of the following:

Your Payroll Report

Your Check Registers

Your Cash Disbursements Journal

Certificates of Insurance for Yourself and Your Employees/Subcontractors

Your General Ledger

Your Financial Statements

If they find out that your subcontractors do not have general liability insurance, they can raise your premium to compensate for the additional risk that they pose to your business. This premium hike will cost you more money initially, but it is nothing compared to the financial burden that a third party claim could become if your subcontractor’s work is substandard.

How Can I Keep My General Liability Insurance Premium From Going Up?

Make sure that your subcontractors have their own general liability insurance policies and that they have enough coverage to pay for any claims that may arise due to the nature of their work. You should obtain copies of their Certificates of Liability as soon as you hire them, and check their general liability insurance coverage every six months to protect yourself and your business.

Street Smart Insurance is committed to providing affordable coverage. Whether you are looking for your first general liability insurance policy or you are shopping for a better price, our agents are ready to help. Call us at 732-462-8343 for a free quote!